Interest only house loan
Interest only home loans are where the borrower chooses to pay only the interest for a defined period of time. Once the time period ends then the monthly payments are adjusted again to include the payment of the principal amount. This can lead to an increase in the amount of payment. When the loan is re-amortized most of the people consider a refinance or sell off the property.
Who can take interest only home loan?
The interest only home loans are a good option when:
You wish to keep the property for a short time and are a regular real estate investor. Your maximum income is from bonus or commission You wish to invest the principal in some other savings that would give you high interest returning investments You are expecting to earn more in the coming few years and you wish to increase your buying power.
Pros and cons:
The most beneficial thing about interest only home loans is that you can use the capital for investment in assets that would give you a high yield. You can use this capital for:
Paying off expensive debts like credit card debtsInvesting in stock marketInvesting more in the 401K planYou can save it for paying your child's college fees
The interest only home loans can either have adjustable or fixed mortgage rates. You can meet a lot of unexpected payments or finance home improvements. On one side where there are many advantages related to the interest only home loans it also has some disadvantages such as not being able to build much equity in your house.
The interest only home loans are not advised for people who have regular wages and are taking a medium sized home loan and do not have any plans of investing in savings. It is usually seen that people in business who have unpredictable income can benefit from these interest-only home loans.
For most of the people the most attractive feature of the interest only home loans is that they can control their payment and cash flow in the interest-only period, as the payments in the interest only period would be lower as compared to the interest and principal inclusive monthly payments. Moreover depending on the situation of the applicant the interest on such loans is lower as compared to the traditional mortgages. But you should be open to options that have flexible payments.
Taking an interest only home loan is a good option also for people who don't intend to stay in their house for more than 10 years. The usual period for which people stay in their houses is from 5-7 years. By taking the interest-only home loan, people can save their money for other purposes.
The interest only home loans give the option of either fixed or adjustable interest rates. If you take the interest only home loan as an adjustable mortgage then you can lower your payments even more every month during the interest only payment period.
There are a number of people who are using interest only home loans these days to acquire real estate property. If you are interested in taking the interest only home loan then you should compare the offers from various lenders and choose the one that gives you the most flexible and the best deal.
Lenders for interest only home loans:
Some of the lenders that give interest only home loans are mentioned below:
E loan:
They are located at 6230 Stoneridge Mall Road; Pleasanton, CA 94588. They have the offer of interest-only home loans for which you are not required to pay the principal for 10 years. You can have the choice of taking an adjustable rate and lower your monthly payments. The best part is that this is not a negative amortization loan product and the principal on your balance will not increase. You can have benefit of tax deductibility and can borrow up to 25% more. You can call them at (925) 847-6200 or fax them at (925) 847-0831.
Quicken loans:
They are one of the leading online mortgage lenders and have an experience of more than 22 years in lending. They offer different types of interest only home loans, which also include 30-year fixed rate mortgage and also adjustable mortgages. They offer interest only home loans with the interest only duration for periods of 3, 5, 7 or 10 years. They serve every client personally and close loans in all the 50 states of United States. The loan applications at quicken loans are processed in as less as two weeks and you can have the benefit of keeping a track of your loan at every step. You can call them at 800-251-9080 or mail them at help@quickenloans.com. Besides you can also chat with them or have a PC talk.
The interest only home loans are short-term loans that can fulfill your needs. However you should use these loans for the purpose they are being taken for. Most of the times it is seen that borrowers misuse such loans and use it for purposes other than the main purpose. Not properly using the interest only loan properly can result in you losing the house. In case you have lots of debts to pay and you can, not afford paying the loan amount then you can use the interest only home loan.
However, you should be careful with the interest only home loans as they can also prevent you from building equity in the house. So you can look forward to buying a luxurious house with an interest only home loan without bothering about the monthly payments for the first few years.
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